Polygon’s native token has performed poorly amid the slide in the crypto market. A deep dive into the on-chain data suggests that the lack of retail interest could see the price of MATIC fall further.
polygon network not scaling
Polygon is a layer-2 scaling solution designed to alleviate Ethereum’s throughput issues and excessive gas fees. Ethereum’s successful transition from Proof-of-Work (PoW) to Proof-of-Stake (PoS) has raised concerns about the long-term viability of the Polygon ecosystem.
On-chain data from Glassnode shows a steady decline in the amount of new addresses created on the Polygon network since December 2022. The downtrend has now been accelerated by the recent announcement of a Shanghai upgrade scheduled for April 12.
Following a resurgence in early March, a further drop in new daily addresses created on the Polygon blockchain was recorded on March 17, just days after the Shanghai upgrade date was announced.
Indeed, the number of new daily addresses on the Polygon network declined by 32% from a local high of 1,960 addresses created on February 17 to 1,318 addresses as of March 21.
The decreasing volume of new addresses on the blockchain network reflects the decreasing interest in its core services and use cases. As a result, the underlying coin may struggle to find new demand.
Similarly, crypto whales seem scared. Data from Sentiment shows that addresses holding 10 million to 100 million MATIC tokens sold or redistributed approximately 43 million MATIC last month, worth approximately $55.9 million.
Between February 22 and March 21, this group of crypto whales reduced their reserves from 253 million to 211 million. Specifically, a closer look at the charts reveals that the buying and selling pattern of crypto investors between 10 million and 100 million MATIC has become closely correlated to price.
Matic Price Prediction: Possible Drop Below $1
IntoTheBlock’s Exchange Market Depth model provides data-driven predictions of potential MATIC price movements in the coming weeks. This is a separate sum of the token holders’ limit orders. It shows the major support and resistance areas in relation to the current price.
The current bearish trend will be stopped 5% below the current prices. It fell to $1.03 with strong demand for 3.5 billion MATIC.
Nevertheless, failure to sustain this demand wall could see the price slide towards $0.90, where a buy-wall for 1.2 billion MATIC sits.
Conversely, to invalidate the pessimistic view, MATIC needs to be above $1.14, where 138 million tokens are up for sale. After that, the selling-wall of 1.35 billion MATIC at $1.30 would be the next resistance to overcome.
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